Hellenic Mediterranen Panel Athens 22 September 2010 Peter M. Swift

INTERTANKO’s Council Agenda October, Singapore Policy Issues Report Items Administration Matters (Including Financial Reports) Other Business

Policy Issues GHG emission reductions Piracy Bunkers and quality of bunkers delivered to ships Mercury in crude

Report Items Iranian sanctions Venezuelan detentions Criminalisation and unjust treatment The Year of the Seafarer “Tripartite” meeting Malacca Cooperative Forum Consequences of Macondo spill Benchmarking study EU and US Reports Committees (including ISTEC and Environmental Committee presentations) Panels

Administrative Matters Membership applications Financial Report - including year end estimate - budget Work Plan 2011 One Voice initiative PLUS Any other business

Piracy Overview

Piracy / Armed Robbery Malacca Straits / South China sea Nigeria / Gulf of Guinea South America Somalia – Gulf of Aden / W Indian Ocean

Gulf of Aden/Somali Coast INTERTANKO new and continuing activities Activities include: UN Participant at UN Contact Group (plenary) and working groups on Piracy, communications with Secretary General Production of Best Management Practices – V3 IMO Revision of MSC Guidance Circulars Preparing paper for MSC 88 on need for more robust action and prosecution of those captured EU and other governments Presentations to EU Commission and MEPs Frequent contact with EU and other member states MILITARY Providing MNLO Secondee to MSCHOA Regular contact with EUNAVFOR, UKMTO, CTF, NATO Participation in Naval Shared Awareness and De-Confliction (SHADE) Meetings

Gulf of Aden/Somali Coast INTERTANKO new and continuing activities Activities include: (continued) OTHER Contributed to production of Anti--Piracy Charts Developed Merchant Shipping Communication Plan Extensive media contacts Developing guide with INTERPOL on evidence gathering and witness statements INFORMATION to MEMBERS Developed Piracy Model Clauses Providing regular Security Bulletins to Members Providing Routing Guidance Participating at Industry Seminars Frequent contacts with national governments

United Nations: Contact Group on Piracy of the Coast of Somalia (CGPCS) Contact Group steers the overall programme WG 1 : measures to improve the coordination of, and information sharing between, the various naval forces present in the region and their interfacing with civilian shipping WG 2 : programmes to facilitate the prosecution of those caught and suspected of piracy WG 3: facilitates development of industry “Best Management Practices” to counter piracy and their application within the international shipping community WG 4 : communications and outreach strategies for use within Somalia and to the wider international community as part of capacity building programmes - this latter to be in conjunction with other UN programmes already on the ground within the region

Best Mangement Practices – Version 3 Practical Measures to Avoid, Deter or Delay Piracy Attacks

Council Discussion/Policy Review Piracy – INTERTANKO positions Eliminating piracy is a SHARED RESPONSIBILITY between the maritime industry and governments, BUT Establishment of LAW AND ORDER on the high seas is the responsibility of governments Our first concern is for the safety and welfare of our seafarers, both at sea and in port, while also concerned for the security of our ships and their cargoes !

Council Discussion/Policy Review – General overview Both industry and governments recognize that eliminating piracy is a shared responsibility and each is doing their part Significant progress has been made by both BUT, more must be done to eradicate piracy and we must work together to do it Maintaining assets and resources will be a challenge for both governments and industry associations over the medium/longer term Adherence to Best Management Practices is still incomplete Any escalation of activity/levels of violence will create new challenges The “solution” to the Somali problem stills seems as distant as ever There is a risk that the “Somali” model is copied elsewhere

Council Discussion/Policy Review A more robust approach / strategy ? Opposition remains to arming crews and carrying armed private guards ?? Support for Vessel Protection Detachments ?? (Issues with administrations and logistics) Effect of US Executive Order on the payment of ransoms ?? (Money laundering issues) Further promotion of BMPs Version 3 Use of citadels / secure centres (linked to military interventions) Encouragement to governments to intercept, capture and prosecute ALL those attacking merchant ships (legal, jurisdiction, evidence and WILL issues) Advocating a review of military strategies

Council Discussion/Policy Review Review of military strategies (in conjunction with commercial shipping) Possible new approaches: partial blockade of Somali (and other) coast extended IRTC to avoid “ballooning" at ends new transit corridors for key routes – Somali basin, Omani coast, other declaration of “no go” zones greater involvement of littoral states Deployment of “fit for purpose” military assets: naval ship platforms, helicopter interceptions MPAs (with new bases in Oman and India)

GREENHOUSE GAS EMISSIONS FROM SHIPPING Overview

Reducing Greenhouse Gas Emissions from Shipping Key Dates UNFCCC and IMO Programmes Market Based Mechanisms Industry Initiatives UNFCCC = United Nations Framework Convention on Climate Change

Reducing Greenhouse Gas Emissions from Shipping Selected Key Dates 12/2009UNFCCC COP15 Meeting, Copenhagen 3/2010IMO MEPC IMO MBM-Expert Group IMO MEPC Intersessional (EEDI) 2010UNFCCC Interim meetings UN High Level Advisory Group on Climate Change Financing /2010 IMO MEPC 61 10/2010INTERTANKO Council Meeting 11/2010 UNFCCC COP16 Meeting, Cancun EU Council/Commission meetings /2011INTERTANKO Council Meeting 7/2011 IMO MEPC 62 12/2011 EU Deadline for IMO/International Agreement 2012Kyoto Protocol expires

UNFCCC - COP15 What was the outcome ? NO targets NO resolution of Kyoto/IMO Treaty conflict NO direct reference to international shipping in Copenhagen Accord BUT in subsequent discussions: Shipping is “expected” to make its “contribution” to Climate Change measures with $$$$ (UN Advisory Group) International Aviation and Shipping should be regulated via UNFCCC and have targets as per other industries (EU Parliament)

IMO Programme To develop: EEDI for new ships (Mandatory) SEEMP (Mandatory) & EEOI (Voluntary) for all ships and, if possible/needed: Market Based Measures for shipping

IMO – UNFCCC Conflicting principles remains a major issue IMO Principle: “No More Favourable Treatment” Versus Kyoto Protocol principle: “Common But Differentiated Responsibility”

IMO Intersessional Working Group To improve the text for mandatory requirements of EEDI and SEEMP in terms of: coverage of ship types and ship sizes for the EEDI; establishment of EEDI baseline(s); frequency of reducing the mandatory value of EEDI (reduction in 3 phases); reduction rate from the baseline for the phases for the EEDI; To develop various guidelines: on the method of calculation of EEDI; for the calculation of baselines for attained EEDI; to support the regulatory framework for verification of the EEDI

IMO MBM – Expert Group Group of MBM schemes which would require all ships to pay a contribution: 1. International Fund for Greenhouse Gas emissions from ships – suggested by Denmark and supported in principle by Cyprus, Marshall Islands and Nigeria 2. Global Emission Trading System for International Shipping, as proposed by Norway, France and Germany with general support from the UK Group of MBM schemes which provide rewards to more energy efficient ships: 3. Leveraged Incentive Scheme based on the International GHG Fund - proposed by Japan. 4. Ship Efficiency and Credit Trading scheme (SECT) based on Efficiency Standards for All Ships - proposed by the USA. 5. Vessel Efficiency System (VES) - proposed by the World Shipping Council. Plus others from Jamaica, Bahamas and IUCN Some are in sector, i.e. shipping only; others are out of sector

Why are MBMs Proposed ? Shipping is expected to become more energy efficient IMO will adopt technical measures for new ships (EEDI) Existing ships will also improve their energy efficiency BUT CO2 emission reductions achieved through technical and operational measures may not be sufficient and their effect will not be seen in the short term The increasing demand for transportation at sea could well lead to a net increase in CO2 emissions from ships even though each ship may become more efficient

Why are MBMs Proposed ? or ETS or other MBM

Application of the GHG Fund Offset (out of sector) Actual emissions BAU Target line EEDI

Application of ETS Offsetting (in sector & out sector) Actual emissions BAU Target line EEDI Funds to UNFCCC

General comments on MBMs Proposals at different level of maturity All proposals need further development All lack policy details with regard to –enforcement –administration –carbon leakage –fraud –vessels registered with non-party flags –harmonisation

Reducing Greenhouse Gas Emissions from Shipping Industry initiatives: Work on EEDI (including Tripartite workshops) Developing and assessing GHG reduction measures for new and existing ships (Tripartite) Developing Marginal Abatement Cost Curves - what is achievable ? Developing operational measures, such as “Virtual Arrival” Developing industry SEEMPs, such as INTERTANKO’s TEEMP – Tanker Energy Efficiency Management Plan plus Active participation in MBM Expert Group

Mitigation Measures

MAC Curves - Industry study

“Virtual Arrival “ OCIMF /INTERTANKO project Virtual Arrival is all about managing time and managing speed. It’s not about blanket speed reduction to match current market conditions. Virtual arrival is about identifying delays at discharging ports, then managing the vessel’s arrival time at that port/terminal through well managed passage speed, resulting in reduced emissions but not reducing capacity.

Virtual Arrival - Summary Cooperation between Charterer (Terminal Operator) and Owner Speed is “optimised” when ship’s estimated arrival is before the terminal is ready Owners and Charterers agree a speed adjustment May use an independent 3 rd party to calculate / audit adjustment Owners retain “demurrage”, while fuel savings and any carbon credits are split between parties Next Steps: OCIMF-INTERTANKO running joint workshops Charter Parties being reviewed (INTERTANKO/BIMCO/BP/Chevron) Individual oil majors and owners “trialling” system Bulk carrier sector examining feasibility

Council Discussion/Policy Review GHG reductions – INTERTANKO positions Support in principle for: Mandatory EEDI – subject to acceptable formula Targeted reductions in EEDI over time – subject to realistic steps (percentages and time) Mandatory SEEMP – subject to applicability of final version and EEOI remaining “voluntary” Regulation/legislation of GHG emission reductions to be coordinated through the IMO and to be flag neutral; i.e. applicable to ALL ships

Council Discussion/Policy Review Market Based Instruments: As a MINIMUM must meet IMO and INTERTANKO principles Do we need an MBM for Shipping ? Cost of fuel is already sufficient economic incentive (frequently 60-80% of total operating costs) Without agreed “targets” for GHG reductions from shipping, how is any shortfall quantified and how is the “purpose” of an MBM defined? Industry to remain passive or be more pro-active ?

IMO Principles 1.Effective in contributing to the reduction of total global GHG emissions 2.Binding & equally applicable to all flag States 3.Cost-effective 4.Able to limit or effectively minimize competitive distortion 5.Based on sustainable environmental development without penalizing global trade and growth 6.Based on a goal-based approach and not prescribe specific methods 7.Supportive of promoting and facilitating technical innovation and R&D in the entire shipping sector 8.Accommodating to leading technologies in the field of energy efficiency 9.Practical, transparent, fraud free and easy to administer

INTERTANKO Future Dates ExCom and Joint OCIMF/ITOPF/INTERTANKO Seminar Vancouver November 2010 Council, AGM and Tanker Seminar ATHENS 8-10 May 2011 Council London October 2011

Thank you For more information, please visit: London, Oslo. Washington, Singapore and Brussels

INTERTANKO’s Strategic Objectives To develop and promote best practices in all sectors of the tanker industry, with owners and operators setting the example. To be a positive and proactive influence with key stakeholders, developing policies and positions, harmonising a united industry voice, and engaging with policy and decision makers. To profile and promote the tanker industry, communicating its role, strategic importance and social value. To provide key services to Members, with customised advice, assistance and access to information, and enabling contact and communication between Members and with other stakeholders.

Management Committee Council Executive Committee Annual General Meeting Q-Quest Sub-Committee Chemical Tanker Sub- Committee Americas Bunker Sub-Committee Chemical Tanker Committee (CTC) Associate Members Committee (AMC) Insurance & Legal Committee Documentary Committee Environmental Committee Human Element in Shipping Committee (HEiSC) Short Sea Tanker Group IT Committee INTERTANKO Offshore Tanker Committee (IOTC) Safety, Technical & Environmental Committee (ISTEC) Worldscale Committee Vetting Committee ASIAN REGIONAL PANEL HELLENIC MEDITTERANEAN PANEL LATIN AMERICAN PANEL NORTH AMERICAN PANEL NORTHERN EUROPEAN PANEL INTERTANKO ORGANISATION CPR Advisory Group

Kyoto Protocol Established under UN Framework Convention on Climate Change (UNFCCC) and adopted in 1997 Ratified by 181 countries – not the USA Categorises Annex 1 (Developed) Countries and Non- Annex 1 (Developing) Countries Annex 1 Countries are committed to make GHG reductions with set targets, but also flexible mechanisms Runs through to 2012, with Conference of Parties (COP15) to meet in Copenhagen in Dec 2009 to develop successor Kyoto recognises “common but differentiated responsibilities”, i.e. developed countries produce more GHGs and should be “responsible” for reductions Kyoto looks to IMO to address Shipping and ICAO to address Aviation, and as such these emissions are currently excluded from Kyoto targets

MBM Proposals Out of shipping sector mechanisms –International GHG Fund (Denmark et al.) –Emission Trading Scheme (Norway et al.) –Rebate Mechanisms (IUCN) In shipping sector mechanisms –Leverage Incentive Scheme (Japan) –Ship efficiency & Credit Trading (USA) –Vessel Efficiency System (WSC) –Port State Levy (Jamaica) –Penalty on Trade and Development (Bahamas)

Ship Efficiency and Credit US EEDI (EIr) IMO EEDI New ship IMO EEDI (US EIa) Efficiency Credit = (EIr – EIa) x Activity Existing hip (EIa) Efficient Credit >0 = Sells Credits Efficient Credit < 0 = Buys Credits

Leverage Incentive Scheme Req. EEDI 1 Req. EEDI 2 Req. EEDI 3 EEDI Attained 0% 50% 100%50% Ship 2 Ship 1 Ship 3 EEOI benchmark Actual PATERN 1 PATERN 2 Initial EEOI Reduced EEOI NEW BUILDING EXISTING SHIPS

Possible Abatement Measures Gas fuelled engines Electronic engine control Waste heat recovery Air cavity lubrication Contra-rotating propeller Fuels cells as auxiliary engines Frequency converters Exhaust gas boilers on auxiliary engines Energy efficient light systems Wing generator Wind power – kite Wind power – fixed sails or wings Solar panels Trim/draft optimising Weather routing Voyage execution Steam plant operational improvements Speed reduction due to port efficiency Propeller condition Speed reduction due to fleet increase Hull condition Propulsion efficiency devices Cold ironing Engine monitoring Reduced auxiliary power usage

Virtual Arrival by taking advantage of known inefficiencies in the supply chain and reducing speed when the terminal is not ready to discharge the cargo In addition to directly reduced emissions, other benefits are: Reduced congestion and emissions in the port area Improved safety Potentially increased use of weather routing Important pre-conditions: The safety of the vessel remains paramount The authority of the vessel’s Master remains unchanged The basic terms of trade remain the same

What is needed to do to make Virtual Arrival work? 1. 1.A known delay at the discharge port 2. 2.A mutual agreement between two (or more) parties to adapt the ship’s arrival time to take advantage of the delay 3. 3.An agreed Charter Party clause that establishes the terms for reducing the speed to adapt to the new arrival time 4. 4.An agreement on how to calculate and report the Virtual Arrival and the performance of the vessel 5. 5.This may involve a Weather Analysis Provider (WAP) 6. 6.OCIMF/INTERTANKO and class are producing transparent standards for verification of WAPs But mainly it’s a win–win situation for all, based on trust and transparency